Almost half of Americans today are living on the edge financially. According to Bankrate’s January Financial Security Index survey, only four in 10 U.S. adults (41%) would have enough money saved to cover a $1,000 emergency cost, such as a car repair or emergency room visit.
Most Americans are unprepared if an emergency struck. According to writer Michael Snyder, some are not saving because they are not able to, barely scrapping by from paycheck to paycheck. Others simply believe there is no need to save money, because they have faith in the economic system. They choose to ignore signs that the economy is slowing down and could falter.
In the survey, most respondents stated that if they needed money they would borrow the money or get it from a relative. However, emergencies are rarely cheap. The median cost for an emergency reported in the survey was $1,750, and three in 10 adults (29%) said they or their family members spent at least $5,000 in the past year on an unanticipated cost.
Not saving is a dangerous mistake, writes Snyder, because during the 2008 financial crisis the government couldn’t save Americans from the collapse of businesses. Many people during that period lost their jobs and could not afford to pay their mortgages, turning them homeless.
“Most Americans are just one small step away from financial disaster,” warns Snyder.